Crowd Funding In Terms Of Turkish Legislation
In practicing, Crowd funding is defined in 2 types as gift-based and share based. The codification process which in started Canada in 2009, it is brought with the amendments in Capital Market Code (CMC). But the contributing of process with secondary legislation is expected and in this context changes which is made in CMC numbered 6362 as published in Official Gazette dated 5 December 2017, SPK is entitled on making amendments and secondary regulation.
Crowd funding is defined as the method of donating or funding to project/ instruction in small quantities via of internet network and social media of individual investor. It is a financing model that has new business ideas or is difficult to access to finance and is especially set up to support technological initiatives.
In related law, crowd funding is defined as collecting money from public via of the platform of crowd funding unless subjecting regarding related articles investor compensate of hereby law in context of mains which is determined by the Capital Market Board (the Board) in order to provide needed funding of investment company or any project.
In the article of TCC 552 titled ‘funding money from public’ providing that reserving the provisions of Capital Market Code, collecting money is prohibited as called for in any way to public with commitment and purpose raised capital of company or establish a company and in Article 562 it is stated that it will be punished by imprisonment from 6 months up to 2 years.
Reserving to the provisions of the Capital Market Legislation, Turkish Commercial Code allows that the Capital Markets Board can regulate exceptions on hereby prohibition. With entering into force of the code, the Capital Market Code was amended and crowd funding was an exception to prohibit money collection. In the amendment of relevant law, the description of ‘publicly-held partnership’ has changed, it has defined that they are called except for those who collect money through crowd funding platforms and crowd funding and money collectors were kept free from the obligations of publicly held companies.
Crowd funding platforms are organizations mediating crowd funding and serving in electronic environment. It is mandatory to obtain permission from the Board to establish and start crowd funding platforms. Principles regarding supervision and control which is used as fitting for purpose which is declared of crowding funding Via binding other Principles and essentials during his activity and maximum limit of the money that can be collected by the project owners and venture companies or that can be invested by each fund provider to These platforms’ organizations, partners, share transfers are determined by the Board.
The establishment of an electronic crowd funding platform is a prerequisite for funding in this manner. Final approval of the Board is required. In addition, in the secondary regulation, it is expected the arrangement of condition of an investment committee will be regulated by the crowd funding platform. On the one hand, due to the funding sources will not be subject to the obligations of publicly held companies and issuers, collecting money from the public as mentioned above, it is not necessary to prepare a prospectus or issuer certificate, even if the number of shareholders exceeds 500 for the same reason, the enterprising company will not be offered to the public.
Secondary legislation to be enacted for the regulations regarding rights of investors, maximum amount of investment that can be taken by the entrepreneur company, share transfer conditions and investment information that can be investor maximally and Fundamentals of crowd funding platforms is expected.
It is expected the secondary legislation which will be enacted regarding fundamentals of mass funding platforms, share transfer conditions, maximum investment information available to the investor, maximum amount of investment that can be taken by the entrepreneur company and regulations on the rights of investors.